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Wednesday
Mar292017

Food Fight: Two Sides to Every Chicken Filler Story

Craft Beer LawyerChair, Franchise & Distribution Practice Group

 

by Barry Kurtz
818.907.3006

 

The Canadian Broadcasting Corporation (CBC) recently aired a segment reporting that real chicken content in Subway sandwiches amounted to a lot less than what the average consumer would expect. The network commissioned DNA testing through Trent University of chicken-based menu items from six restaurant chains.

The results of the testing are depicted here (Trent University says ratios of actual chicken to plant fillers are "rough estimates"):

Chicken Filler Fiasco

Remaining ingredients in Subway’s chicken items turned out to be mostly plant-based or soy fillers, according to a researcher at Trent. But the CBC report, called “The Ultimate Chicken Challenge” also contended there were many other ingredients. According to the segment, Subway initially didn't respond regarding Trent's test results other than to say the chain would check with suppliers regarding quality standards.

The network then sought follow-up testing from the University of Guelph's Metabolic Test Kitchen. A dietitian explained the ingredients found by this lab were varieties of starches, salts and sugars. Guelph's processed meat specialist says all ingredients found are safe and approved by the Canadian government. 

Subway asked for a full retraction from the broadcaster. A restaurant spokesman stated:

The accusations made by CBC Marketplace about the content of our chicken are absolutely false and misleading. Our chicken is 100 percent white meat with seasonings, marinated and delivered to our stores as a finished, cooked product.

The franchisor notified CBC of its intent to sue, and reports say the sandwich chain will demand $210 Million in damages. The network says it has not yet been served.

So what does this mean for restaurateurs and other franchises facing similar situations? What are Subway's chances of winning?

Franchise Defamation Suits

Restaurant and other franchise defamation lawsuits are not uncommon, particularly in the world of online reviews. Yelp! for example, has been sued numerous times because of user-generated negative ratings and comments, though typically, consumer-aggregated review sites are protected from legal action by free speech rights.

California even has a Yelp Law – Assembly Bill 2365 was signed by the governor in 2014 to protect consumers stating opinions about a business. Establishments attempting to thwart negative reviewers by putting certain clauses waiving a customer's right to comment publicly in their contracts may find themselves fined when threatening to enforce those clauses.

Then there's this case from the Supreme Court of Nevada in which restaurant owners sued the Reno Gazette-Journal for a negative review. A freelance journalist visited the restaurant and made several defamatory statements, including:

1.  I scooped out guacamole with my fork and dug in.  One taste told me what I had feared:  this pale green stuff was definitely not the real deal.

2.  At this point my spouse pointed out what I was beginning to realize: “All this came out of some sort of package.”

3.  The cost cutting measure applied to the ornamentation had spilled into the kitchen.  The can of name-brand beans we spy while paying our check confirms this.

One of the questions considered here by the court revolved around the nature of protected statements of opinion in published food reviews, and concluded that:

"Defamation is a publication of a false statement of fact. Statements of opinion cannot be defamatory because 'there is no such thing as a false idea'. . . "

The Supreme Court of Nevada found that reasonable persons would conclude the journalist's statements regarding freshness of the food were merely the writer's opinions. It found the same regarding the canned beans – the restaurant owners admitted they kept canned beans on the premises in case of supply emergencies – therefore the writer's statement was substantially true.

Subway's Chicken Kerfuffle: "Let It Go"

Negative Restaurant Reviews DefamationGenerally speaking, a franchise system or individual restaurant doesn't have much in the way of legal recourse when bringing defamation lawsuits. Defendants will almost always claim they stated opinion and assert first amendment rights.

In this case, CBC Marketplace relied on lab tests to make their claims, which most would consider "truth".

The best option for this franchise was already taken: that of asking the network for a retraction. Failing that, the chain may want to consider commissioning other labs with different testing methods to analyze their menu ingredients. Should Subway find more positive data from other labs, they could counter the bad publicity by publicizing these better results.

Or, they can find different suppliers.

 

Barry Kurtz is the Chair of our Franchise & Distribution Practice Group.

 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Wednesday
Mar222017

Whacky Employment Claims: Who's Whackier? Management or the Employee?

Lawyer for EmployerEmployment Defense

by Nicole Kamm

818.907.3235

 

 

As employment defense attorneys, we see many strange situations arise in the workplace.

The question is, how prepared are you as an employer to handle the wackiness that may potentially arise when your employees make bizarre requests, do odd things, or intentionally violate company rules? And what if those oddball employees happen to be your managers responding to perfectly legitimate claims…?

It's time to illustrate with another Whacky Employee Claims blog. We hope you will find the following employment situations educational, if not entertaining.

 

#5:  Milking Punctuation Errors for All They’re Worth

Seventy-five milk truck drivers in Maine may be getting a $10 million pay day. Three of those drivers filed a class action lawsuit in 2014, claiming Oakhurst Dairy failed to pay them four years of overtime wages.

The problem arose not from a miswritten company policy or employment agreement, but from a state law (known as Exemption F) identifying which employees were exempt from overtime:

“The canning, processing, preserving, freezing, drying, marketing, storing, packing for shipment or distribution of . . .”

One more comma after “packing for shipment” would have distinguished packing and distributing as separate activities. But as the law is written without the serial or “Oxford comma” as it is sometimes known, the Plaintiffs were able to argue their duties fell outside Maine’s exemption law and they were entitled to overtime pay.

A trial court focused on the spirit of the law, and awarded partial summary judgment to the employer. But an Appellate Court disagreed, stating:

Given that the delivery drivers contend that they engage in neither packing for shipment nor packing for distribution, the District Court erred in granting Oakhurst summary judgment as to the meaning of Exemption F. If the drivers engage only in distribution and not in any of the stand-alone activities that Exemption F covers . . . the drivers fall outside of Exemption F’s scope and thus within the protection of the Maine overtime law.

Employer Tip: You don’t have much say in how state and federal laws are written, but when something seems unclear or ambiguous, consult counsel. Additionally, be ultra-careful in how your company policies and employment agreements are written and stay apprised of frequent changes in employment laws. 

 

#4: Simply Not Suited

Jessica Zelinske was an ad accountant at Charter Communications in Minnesota. She was also very attractive, and when she won a modeling gig to pose for Playboy in a 2011 "Hot Housewives" issue, Zelinske contends she got the “o.k.” from her boss.

Zelinske alleged her supervisor assured her she would not be fired if she posed nude, but once the magazine hit sales racks, she received a “Corrective Action Report” notifying her of her immediate termination. The company informed her: "You have violated Charter's professional conduct policy by making the personal choice to pose nude in a well-known publication."

Zelinske sought $150,000 for emotional distress, compensatory damages and legal expenses.

Employer Tip: Management should be familiar with the implications of all company policies to avoid making promises to employees they can't keep. 

 

#3: The Importance of Being Earnest (in Record-Keeping)

John Sederquist and Brenda White sued employer Steven Miller for unpaid overtime. This bothered Miller immensely because a.) He was pretty sure he paid all of his workers all monies owed on time, and b.) He couldn’t remember ever hiring White. So he did some digging.

Some of his other employees knew White, but no one ever remembered hiring her or actually working with her. But she did appear on his payroll for several months a few years before she jointly filed the lawsuit. For those several months, she was paid over $21,000 for work she never did. Suing for unpaid overtime was just salt in the wage and hour wound.

As it turned out, White and Sederquist were romantically involved. At the time of White’s supposed employment, a coordinator who is currently serving 20 years’ probation for thievery was handling Miller’s payroll. Miller decided to litigate, White cracked under pressure during deposition, and both sides dropped the lawsuit.

Employer Tip: If possible, take steps to enforce some checks and balances when it comes to handling payroll. While litigation can be costly, pursuing a case all the way is sometimes the way to go. 

 

#2: "I Dreamed a Dream" (of not being harassed for my weight)

Laura Ziv filed a $6 million lawsuit against her boss and perfumer employer, alleging verbal assaults regarding her looks, and in particular, her weight. Ziv claims her supervisor compared her to Britain's Got Talent star Susan Boyle, and sometimes called her "Fatty" in front of coworkers. 

Additionally, Ziv claims her supervisor wanted her to develop a competing perfume brand with him, while on company time. When she refused a second time, her supervisor removed her from the company's biggest account and took away a promised bonus. Ziv took a medical leave for high blood pressure and was threatened with termination. She claimed she suffered a brain hemorrhage due to stress.

Employer Tip: Comments regarding an employee’s weight or appearance are generally inappropriate, and could potentially lead to hostile work environment claims. Ensure entire staff knows they may report such incidents to people other than their direct supervisors, and that inappropriate remarks will not be tolerated. 

 

#1: It's a Tough Sell

Think you've heard the last of the Wells Fargo fake accounts scandal? Think again. A class action lawsuit by former employees alleges Wells Fargo fired them for ethical behavior – i.e., for refusing to meet sales quotas by opening bogus additional accounts for bank customers.

Alexander Polonsky and Brian Zaghi represent a class of Wells Fargo current and former employees over the past ten years, who may have been terminated, demoted, or retaliated against for not meeting their sales quotas. They allege employees are pressured into coercing family members and friends to open accounts to meet quotas, and were required to work "beyond a typical work schedule" without compensation – or they were threatened with demotion and termination. Plaintiffs seek $2.6 billion, "and possibly more."

Employer Tip: It is important to “walk the walk.” Comply with the law, and don't encourage or incentivize management or employees to act in violation of the law.

 

Nicole Kamm is a Shareholder in our Employment Practice Group

 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

 

Friday
Mar102017

Initiating Unlawful Detainer Actions: Perfection Not Required

Business LitigationReal Estate Litigation Attorney

by Nicholas Kanter
818-907-3289

 

In November 2016 the California Supreme Court ordered that a decision from the appellate division of the San Diego Superior Court in U.S. Financial, L.P. v. Michael McLitus (“McLitus”) be published.   

McLitus held that an owner that acquires a property at a non-judicial foreclosure sale is required to perfect title before serving a Three Day Notice to Quit, the first step in initiating an unlawful detainer action under Code of Civil Procedure §1161a. The court held if the Notice to Quit was served before title was perfected, the notice would be defective and could not support an unlawful detainer action.

Commercial Tenant Eviction

Based on the decision in McLitus, the new owner of a property purchased at foreclosure would have to wait to receive the Trustee’s Deed Upon Sale from the foreclosure trustee, and then until the Trustee’s Deed is recorded by the county recorder, before serving a Three Day Notice to Quit. Thus, McLitus had the potential effect of delaying a new owner from obtaining possession to an occupied property.

McLitus Decision Short-Lived

Four months after the McLitus decision was ordered published, the Second Appellate District of the Court of Appeal issued an opinion squarely rejecting the McLitus holding.   

In Dr. Leevil, LLC v. Westlake Health Care Center (“Westlake”), Westlake Village Property, which owned Westlake Health Care Center (WHCC), defaulted on a loan and filed for bankruptcy. The bank sold the loan to Leevil who instituted a non-judicial foreclosure, and subsequently purchased the health care center at a trustee’s sale. Leevil then served a Notice to Quit on WHCC. When WHCC refused to vacate the property, Leevil filed an unlawful detainer action under §1161a. Leevil ultimately obtained possession to the property.

On appeal, WHCC relied on the McLitus decision to argue the Notice to Quit was invalid because Leevil did not perfect title before serving the Notice. 

The Court of Appeal rejected WHCC’s argument and affirmed the trial court’s decision. The Court found that §1161a does not require that title be perfected prior to serving a Notice to Quit. Rather, this Section only requires that title be perfected before a party may be removed from the property following a foreclosure sale.

Code Civ. Proc. Section 1161a states, in pertinent part:

a person who holds over and continues in possession of . . . real property after a three-day written notice to quit the property has been served . . . may be removed therefrom . . . [w]here the property has been sold in accordance with [s]ection 2924 of the Civil Code . . . and the title under the sale has been duly perfected.

Nothing in Section 1161a requires that title be perfected before a Three Day Notice to Quit is served.  Further, the Court of Appeal held that “[n]one of the cases cited in McLitus support the requirement that title be perfected before service of the notice to quit.”

Future of Unlawful Detainer Suits

Because the Westlake decision is binding on lower courts, and decisions from the Appellate Division of the Superior Court are not, trial courts should be guided by Westlake.  Accordingly, as it stands now, purchasers at foreclosure do not have to wait until title is perfected before serving a Three Day Notice to Quit.  

Nicholas Kanter is a Real Estate and Business Litigation attorney. 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Wednesday
Mar082017

The Customer Is (Not) Always Right: An Employer's Duty to Protect

Discrimination Claims Prevention 

by Amy I. Huberman

818-907-3014

 

Everyone is entitled to their opinion, and in this political climate, it seems as though more people are comfortable voicing those opinions, even if they may offend someone.

Although free speech is a primary pillar of our democratic heritage, in the employment law context, that particular right may cause liability for the employer.

For example: 

Shortly after the November election, an airline passenger was permanently banned from flying Delta Airlines, for his expletive-ridden pro-Trump/anti-Clinton rant before takeoff. Though the flight crew allowed the passenger to continue on his journey, corporate saw the viral video shot by a fellow passenger and clipped the disruptive passenger’s wings:

We must stay true to Delta’s core values and treat one another with dignity and respect. We also must remain committed more than ever to the safety of our customers and our crew members. We will not tolerate anything less.

In another instance, a Michael’s retail customer went on a tirade and claimed she was discriminated against by African American employees when asked if she wanted to purchase a shopping bag. Like Delta Airlines, the retailer’s corporate office also released an official statement:

At Michaels, we do not tolerate discrimination or racism of any kind against our team members or customers. We regret that our customers and team members were affected by this unfortunate incident and are grateful for the leadership of our store team in working to resolve it without further escalation.

Even more recently, a Walmart customer in Texas said to a store employee, “I know you ain’t leaving. I know you’re here to stay. Y’all should go to your own countries and fix up your own countries.” A fellow Walmart employee filmed the incident. The employee being berated by the customer responded that she didn’t want to hear anymore, and then had her supervisor take over. That employee later expressed concern for her job, should she share the video with the media. Walmart has yet to respond officially.

Thus far, xenophobic incidents (in the employment context) in California aren’t as rampant. But if, and when, something similar does occur, here’s what employers should know:

California Employees Protected Under FEHA

The California Fair Employment and Housing Act protects employees from discrimination, retaliation, harassment and bullying. In 2016, several FEHA amendments expanded protections for job applicants and employees. The amendments require employers to implement a complaint procedure where employees can safely report harassment, discrimination or bullying behavior without fear of retaliation. 

FEHA also mandates that employers must take steps to protect its employees from third parties – including patients, clients and customers; vendors; delivery personnel; or others. Employers cannot turn a blind eye when an employee in the workplace is subjected to harassing, discriminatory or disrespectful conduct based on the following real or perceived characteristics: 

  • Race
  • Color
  • Age (over 40)
  • Gender (identity, expression)
  • Sexual orientation
  • National origin, ancestry or citizenship
  • Religion
  • Marital status, domestic partner status
  • Military or veteran status
  • Sex, pregnancy, childbirth, breastfeeding, related medical conditions
  • Physical or mental disability or conditions
  • Genetic information

FEHA requires employers notify its employees of complaint procedures. In addition, when a complaint by an employee is submitted, that complaint must be: 

  • Responded to in a timely manner
  • Kept as confidential as possible
  • Investigated impartially and as soon as possible

Employers should also:

  • Document and track the investigation’s progress
  • Provide options for remedial actions and resolutions
  • Conclude the investigation in a timely manner 

Although the “customer is always right,” a customer harassing and discriminating against an employee is wrong. Employers should update all policies and procedures to ensure the actions of third parties, such as the conduct described above, does not lead to costly and unnecessary litigation. 

Amy I. Huberman is an Employment Defense Attorney.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Thursday
Feb162017

Hiring and Firing in Los Angeles: Fair Chance Initiative Update

Lawyer for EmployersEmployment Defense

by Tal Burnovski Yeyni

818-907-3224

 

We told you about Los Angeles’ Ban the Box ordinance in early December. Also known as the Fair Chance Initiative for Hiring Ordinance (FCIHO), the new regulation seeks to reduce recidivism by limiting inquiries regarding applicants’ criminal histories.

The City of Los Angeles recently posted further resources online in connection with the FCIHO. They include: 

  • Rules and Regulations for Implementing FCIHO

  • Notice to Applicants and Employees (for Private Employers or City Contractors)

  • Assessment and Reassessment Forms

  • Sample Letter: Notice to Rescind Employment Offer

  • Complaint Forms (in English and Spanish for applicants and employees) 

If you read our post in December (see link above), you know that employers must include in employment ads notice regarding compliance with the FCIHO.

Employers may not inquire about an applicant’s criminal history until AFTER an initial offer of employment has been made – in other words, not on a job application or during the interview or selection process.  If an applicant provides information/documents regarding criminal history, any decision to withdraw or cancel the conditional offer of employment may not be made until the employer complies with specific notice requirements and performs written assessment.

The Rules and Regulations suggest that the employer shall at least consider the following factors in the assessment: 

  • What is the nature and gravity of the offense? (The harm caused by the criminal conduct should be considered)

  • How much time has passed since the offense? (Convictions remote in time are less significant than similar more recent ones)

  • What is the nature of the job duties and responsibilities? (Consider the job’s essential functions and the circumstances under and the environment in which the job is performed.)

  • Is the employer looking at ONLY convictions? Arrests cannot be considered in employment decisions. 

Duty to Maintain Records for a Period of Three Years. Employers are required to retain all records and documents related to applicants’ employment applications and the written assessment and reassessment for a period of three years following the receipt of an applicant’s employment application.  The Rules and Regulations specify that if an employer relied on oral information to form a determination of Adverse Action, the employer should summarize this information by putting it in writing and maintain it with the employment records.  For example, a verbal reference check with former Employer should be documented.

Of course, certain exceptions still apply, i.e. if the employer is mandated by federal or state law to obtain information regarding conviction, especially if the position requires the use of a firearm, or if the employer is prohibited by law from hiring applicants with criminal convictions. Also, some applicants may be prohibited from holding certain positions because of their criminal histories.

Remember, fines on employers who violate the Rules and Regs of FCIHO will be imposed as of July 1, 2017.

Tal Burnovski Yeyni is an attorney in our Employment Practice Group

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

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